KPMG warns Labor on artificial intelligence regulation

One of Australia’s largest accounting firms has warned the Albanese government to tread carefully on artificial intelligence regulation.

Pointed remarks: federal Treasurer Jim Chalmers during question time at Parliament House in Canberra on Monday. Picture: NewsWire / Martin Ollman

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One of Australia’s largest ­accounting firms has warned the Albanese government not to be too trusting of artificial intelligence but to avoid the temptation of overregulating it early and ­ risking the loss of valuable investment.

The use of artificial intelligence has become a heated issue, with Australia’s largest miners and business groups concerned over union demands to have greater control over AI decisions.

Last week, the ACTU called for the “worker voice” to be involved in the “design, development, implementation and ­review” of AI in its submission to the Productivity Commission’s five pillars inquiry.

Now KPMG in its submission to Jim Chalmers’s Economic Reform Roundtable in August said most Australians were concerned about negative outcomes. “Distrust in AI is not without basis,” the accountancy firm’s chairman, Martin Sheppard, and chief executive Andrew Yates said.

“An upcoming KPMG report that analyses AI regulation and its economic impact suggests regulation must strike a delicate balance. Overly stringent rules may stifle innovation, while insufficient oversight can undermine public confidence and economic outcomes. This balance is particularly important in a global context where geopolitical competition is pushing divergence in regulatory approaches to AI.”

Labor’s former industry minister Ed Husic – who is a supporter of an economy-wide AI act being pushed for by unions – was nominated by Labor’s caucus last week to chair the parliamentary economic committee, a body that would likely review reform proposals adopted from the August roundtable.

The Productivity Commission released an interim report noting that it would soon make recommendations to help “unlock the potentially transformative power of data and digital technologies like artificial intelligence”.

PC chair Danielle Wood told The Australian in June that any new regulation on AI should not provide disincentives for investment in technology to lift ­productivity.

Any legislation on the topic would likely also need support from the upper house, where some senators such as David Pocock have raised concerns, asking experts at last week’s mini-­economic reform roundtable, convened by independent Allegra Spender, how AI would hit government revenues.

“I’m really concerned about the lack of general discussion about the impact of our job losses on our tax base,” Senator Pocock said. “AI is fundamentally different to, say, the press or the Industrial Revolution … so what do you do with huge job losses, particularly in white collar professions?”

KPMG chief economist Brendan Rynne said AI was creating concerns around jobs but ultimately new jobs would be born.

The Treasurer has said AI would be a key part of the roundtable in August, while Assistant Minister for Productivity Andrew Leigh recently told The Australian unions must be involved in the introduction of AI.

“You have to have unions at the table there and have that conversation,” he said.

KPMG also raised in its submission that tax inefficiencies needed to be addressed.

“We argue that current complexities and inconsistencies hinder investment and productivity.

“The submission highlights Australia’s high corporate tax rate, fragmented research and development support, and burdensome compliance requirements as major deterrents to foreign and domestic investment.”

Earlier this month, the Commonwealth Bank of Australia ­argued that cutting the corporate tax rate was not a priority and urged tax reform on GST.